October 22, 2021

Volume XI, Number 295

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New York City Expected to Ban the Use of Credit Checks in Employment

On April 16, 2015, the New York City Council passed an amendment (“Amendment”) to the New York City Human Rights Law (“NYCHRL”) that, if signed into law, would make it an unlawful discriminatory practice for employers to use “consumer credit history” for employment purposes. The Amendment contains several exceptions, discussed below, but would affect how employers conduct background checks. The Amendment has been delivered to Mayor Bill de Blasio’s office. If he signs the bill, as is expected, the Amendment will become effective 120 days later.

Prohibited and Permissible Inquiries and Actions

The Amendment prohibits employers from requesting or using consumer credit history to (i) make an employment decision pertaining to an applicant or an employee, or (ii) discriminate against an applicant or employee. The term “consumer credit history” is defined as an individual’s credit worthiness, credit standing, credit capacity, or payment history, as indicated by:

  • a consumer credit report;

  • credit score; or

  • information that an employer obtains directly from the individual regarding:

  • details about credit accounts, including the individual’s number of credit accounts, late or missed payments, charged-off debts, items in collections, credit limit, prior credit report inquiries; or

  • bankruptcies, judgments, or liens.

The Amendment includes a carve-out permitting employers to request or receive consumer credit history pursuant to a lawful subpoena, court order, or law enforcement investigation.

The Amendment falls in line with credit check laws passed in recent years in California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, North Carolina, Oregon, Vermont, and Washington.

Exemptions

Notably, the Amendment provides certain exemptions where requesting or using consumer credit history is, indeed, permissible.

Employer Exemption. The Amendment does not apply to employers that are otherwise required to use an individual’s consumer credit history for employment purposes by federal or state law or by a “self-regulatory organization,” as defined by the Securities Exchange Act of 1934. Thus, the Amendment does not apply to employers subject to the rules of the Financial Industry Regulatory Authority (“FINRA”).

Position Exemptions. The Amendment does not apply to persons applying for positions:

  • as police officers or peace officers;

  • subject to a background investigation by the New York City Department of Investigation;

  • in which the employee is required to be bonded by federal, state, or city law;

  • in which the employee is required to possess security clearance under federal or any state’s law;

  • as a non-clerical employee having regular access to trade secrets (which excludes general proprietary company information, such as handbooks or policies), intelligence information, or national security information;

  • (i) where the employee would have signatory authority over third-party funds or assets valued at $10,000 or more, or (ii) that involve a fiduciary responsibility to the employer with the authority to enter financial agreements valued at $10,000 or more on behalf of the employer; and

  • where the employee has regular duties that allow the employee to modify digital security systems established to prevent the unauthorized use of the employer’s or clients’ networks or databases.

Covered Employers

The NYCHRL applies to employers, including employment agencies, with four or more employees (including independent contractors who are “natural persons” and not themselves employers).

Enforcement

An employee alleging a violation of the Amendment may either bring a complaint with the New York City Commission on Human Rights or proceed directly to court.

What Employers Should Do Now

While awaiting the mayor’s signature, New York City employers should:

  • review the employer exemption to the Amendment to determine whether it will apply to them generally;

  • review the position exemptions to determine if they may request or use consumer credit history in connection with one or more particular positions;

  • review (and get ready to revise) background check procedures, as applied;

  • prepare to train recruiters and human resources professionals who perform background checks on whether consumer credit history may be used at all or for certain positions; and

  • confirm that employment, placement, and temporary agencies, as well as background check providers, are aware of the Amendment and are poised to revise their forms and procedures in compliance with the Amendment for New York City applicants and employees in companies and positions covered (and not exempted) by the Amendment. 

©2021 Epstein Becker & Green, P.C. All rights reserved.National Law Review, Volume V, Number 113
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About this Author

William Milani, epstein becker green, new york, International Employment Law
Member

WILLIAM J. MILANI is a Member of the Firm in the Labor and Employment practice of Epstein Becker Green. Based in New York, he heads the firm's International Employment Law group and is the Vice Chair of the firm's Board of Directors.

Mr. Milani is actively engaged in the private practice of labor and employment law exclusively on behalf of multinational and domestic corporations, with particular experience representing clients in the financial services industry. He has received an "AV Preeminent" Peer Review Rating by Martindale...

212-351-4659
Susan Gross Sholinsky, Labor Employment Attorney, Epstein Becker Green Law Firm
Member of the Firm

SUSAN GROSS SHOLINSKY is a Member of the Firm in the Labor and Employment practice, in the New York office of Epstein Becker Green. She counsels clients on a variety of matters, in a practical and straightforward manner, with an eye toward reducing the possibility of employment-related claims. In 2013, Ms. Sholinsky was named to theNew York Metro Rising Stars list in the area of Employment & Labor.

212-351-4789
Jeffrey M. Landes, Epstein Becker Green, Employment Litigator, New York Lawyer
Member

JEFFREY M. LANDES is a Member of the Firm in the Labor and Employment practice, in the firm's New York office.

Mr. Landes' experience includes:

  • Counseling clients in a variety of industries—including financial services, retail and communications—in all facets of employment law, including compliance with EEO laws and other statutes governing the workplace, independent contractor issues, executive terminations, restrictive covenants, drug testing, background checks, employee discipline and...

212-351-4601
Dean L. Silverberg, Epsetin Becker Green, Employment Matters Attorney,
Member

DEAN L. SILVERBERG is a Member of the Firm in the Labor and Employment practice, in the firm's New York office. He practices both public and private-sector labor and employment law, and is actively involved in employment and workplace tort litigation, labor arbitration, collective bargaining negotiations, wage and hour audits, and human resource consultation and management. 

212-351-4642
Nancy Gunzenhauser Popper Labor Employment Attorney Epstein Becker Law Firm
Member of the Firm

NANCY GUNZENHAUSER POPPER is a Member of the Firm in the Employment, Labor & Workforce Management practice, in the New York office of Epstein Becker Green.

Ms. Popper:

  • Counsels clients on compliance with EEO laws, the Americans with Disabilities Act, the Family and Medical Leave Act, worker classification issues, and other federal, state, and local statutes governing the workplace

  • Advises employers in all facets of the employment relationship, from pre-employment considerations and hiring to terminations and post-employment...

212-351-3758
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